pro-manchester Fintech Lunch

by Sam Shaw, B2B content consultant

pro-manchester hosted its latest fintech lunch on Thursday, once again gathering a full room – from latent learners to leading specialists across industry, commerce and academia.

First up: the fireside chat

Kicking things off was the ‘fireside chat’, where Steve Robson, Global Head of Liquidity at HSBC was deftly interviewed by Kimberley Waldron, founder and MD of StartedPR.

Kimberley opened by asking Steve about the biggest issues on his mind.

Macro observations

He immediately pointed to US trade tariffs, describing how the bank had been in a state of “fire drill” since Donald Trump’s so-called ‘Liberation Day’. The impact was especially evident during ISA season in the UK, with far more people moving to cash than usual.

“People appear to be holding fire until the market sorts itself out,” he said, reflecting widespread uncertainty as global markets swung wildly in response to US tariffs.

Note this lunch took place just before the US-UK trade deal was announced, but Steve said the business was already preparing to see a shift out of US dollars and into other currencies.

Interestingly, he observed that China’s previous stimulus package had a greater market impact than recent US policy moves. While still early days, he pointed out companies like Apple were already adapting, shifting iPhone production for US markets from China to India, for example.

Big player frustrations

We heard some frustrations around HSBC’s digital strategy versus some of the fintechs, for instance he described:

• A former colleague who had set up a supply chain finance business had his salary paid into an HSBC account only to immediately move it over to Monzo
• In Mexico, losing market share despite offering better rates because a competitor had a superior app
• And the levels of red tape and eye-watering costs hampering progress, such as needing roughly 70 people to sign off a proposal or a debit card PIN reset in the mobile app costing “north of half a million dollars”.

Despite these hurdles, progress was being made. HSBC’s app had been “heavily revamped,” inspired by the more intuitive customer experiences typically seen in fintech.

HSBC’s new app now allowed digital onboarding in just six minutes – a dramatic improvement.

“The old one was looking quite tired. We’re now aiming to have stock investing, health, life goals, and the ability to navigate through it very quickly,” he said.

The untapped data opportunity

Where data was making a massive difference was around cross-marketing and product extension. Premium clients being offered travel insurance, for example. With a focus on wealth, data from multiple sources helps build a better picture of the emerging affluent demographic.

Trigger-based marketing approaches (or nudges) are a recent area of development.

“If you know customers are doing certain things, they’re probably going to do certain other things. So how do we communicate with them?”

The data underpinning these activities and behaviours is such a rich untapped mine, with a laser-focused opportunity around timing, in particular.

He drew parallels with a mobile operator that sends a message out when you land in another country. Or the AI models used by HSBC’s credit card partners Visa and MasterCard, which use recent purchase information to signal whether a customer was about to travel.

The post-lunch panel

After lunch, we turned to hear a panel discussion, chaired by David Gardner, partner at law firm TLT LLP, who moderated the discussion between:

• Jackie Kingham – Director of Transformation UK at Raisin
• Steve Whiting – Head of Payments Technology and Founding Member at Soldo
• Karl Elliott – Brand and Marketing Director at Manchester Building Society
• Wayne Scott – Regulatory Compliance Solutions Lead at NCC Group Software Resilience at NCC Group.

In a wide-ranging discussion on the transformative role of AI in financial services, the group covered regulation and the FCA’s newly announced national strategy, Open Banking and data-sharing and various issues and opportunities around operational resilience.

Below are a few of the key points made:

Regulatory proportionality

Raisin’s Jackie said it was important the FCA took a risk-based approach to its strategies and how they treat organisations of different sizes.

She said: “I think a company like Raisin or Manchester Building Society doesn’t have the same risks as a Deutsche Bank, HSBC or Citi, yet we still have to do all the same things at a very similar scale, and it costs a lot more.

“I would love to see how the government plans to tackle it, because there are some great ideas and intentions behind all those regulations but for a very small firm that just wants to try make a profit, it can be really difficult to meet all of those requirements and actually operate as a viable business.”

Open Banking – getting there, but more to come

Soldo’s Steve said there were a raft of opportunities to come from Open Banking.

“We’ve had to open our own API and we’re not a Barclays or HSBC – we don’t see people queuing up to access our data. Yet surprisingly, we found it was very valuable. We’ve had other fintech players integrating into our tech, creating this API-based economy. It’s a fascinating and growing environment.”

He drew the comparison with credit cards. You make a high-value purchase on one side of the world, return home to the other side of the world. The vendor trusted you because you paid with a card that said Visa, Mastercard or Amex – and that purchase is protected. You can get chargebacks. The machine learning that sits underneath is probably the most advanced outside the military or medical professions.

He added: “Most banks have got very sophisticated AI and machine learning models already, looking for fraud. Those parties are very strong and easy to use way of paying and receiving money. When Open Banking can at least equal that level of comfort, security and usability, it may well be useful and become more prevalent.”

Defining friction and tailoring solutions

Karl from Manchester Building Society made the point that most people assume fintech only ever means digital banking.

“We are predominantly a place-based organisation – we build our strength in the communities in which we’re located and the manner we deliver generational face-to-face, trusted service. But we can still use AI to drive efficiency, remove friction from our processes to speed up, improve or enhance the decision-making processes, conversations or engagement.”

He added that the business was reticent to have AI remove the opportunity for having those conversations.

“We refer to ‘good’ friction and ‘bad’ friction.”

• Good friction = all the great, informative conversations that build relationships with trust and longevity
• Bad friction = all the things that slow the business down, make things clunky or slow, and fail to offer the breadth of experience.

It’s important to offer customers choice rather than exclusively forcing them down one route, he said – a point particularly relevant when thinking about vulnerable customers.

“Let’s not leave those people behind in the rush for making sure that everything’s purely digitised in terms of the product and a cashless society.”

Lower reg = higher risk

NCC Group’s Wayne made the point that regulation exists to prevent the damage that businesses can cause to society – yes it costs and can be a burden but is undeniable.

“When we talk about the reduction of regulation, somebody somewhere is introduced to a risk. I’m just hoping that with any regulatory change or regulatory reduction, those risks and the damage that could potentially be caused has been assessed and understood. That the potential growth that can be delivered outweighs the potential damage that can cause. In short, I hope they’ve done their risk assessment.”

He added the point that a common assumption is made that regulation stifles innovation, yet stressed (in response to a point in the Q&A) there was no economic evidence to support that view.